Fiscal policy and interest rates: the role of financial and economic integration

It is commonly believed that a fiscal expansion raises interest rates. However, these crowding out effects of deficits have been found to be small or non-existent. One explanation is that financial integration offsets interest rate differentials on globalised bond markets. This paper measures the degree of integration of government bond markets, using spatial modelling techniques to take this spillover on financial markets into account. Our main finding is that the crowding out effect on domestic interest rates is significant, but is reduced by spillover across borders. This spillover is important in major crises or in periods of coordinated policy actions. This result is generally robust to various measures of cross-country linkages. We find spillover to be much stronger among EU countries.

Sustainability of EU fiscal policies. A panel test

The fiscal policy rule implicit in the Stability and Growth Pact, has been rationalised as a way to ensure that national fiscal policies remain sustainable within the EU, thereby endorsing the independence of the ECB. We empirically examine the sustainability of European fiscal policies over the period 1970-2001. The intertemporal government budget constraint provides a test based on the cointegration relation between government revenues, expenditures and interest payments. Sustainability is analysed at both the national level and for a European panel. Results show that European fiscal policy has been sustainable overall, yet national experiences differ considerably.

Estimating the effects of fiscal policy under the budget constraint

I reconsider the short-term effects of fiscal policy when both government spending and taxes are allowed to respond to the level of public debt. I embed the long-term government budget constraint in a VAR, and apply this common trends model to US quarterly data. The results overturn some widely held beliefs on fiscal policy effects. The main finding is that expansionary fiscal policy has contractionary effects on output and inflation. Ricardian effects may dominate when fiscal expansions are expected to be adjusted by future tax rises or spending cuts. The evidence supports RBC models with distortionary taxation. We can discard some alternative interpretations that are based on monetary policy reactions or supply-side effects.

Fiscal sustainability across government tiers: an assessment of soft budget constraints

This paper analyses how fiscal adjustment comes about when both central and sub-national governments are involved in consolidation. We test sustainability of public debt with a fiscal rule for both the federal and regional government. Results for the German Länder show that lower tier governments bear a relatively smaller part of the burden of debt consolidation, if they consolidate at all. Most of the fiscal adjustment occurs via central government debt. In contrast, both the US federal and state levels contribute to consolidation of public finances.

Combine to compete: improving fiscal forecast accuracy over time

Budget forecasts have become increasingly important as a tool of fiscal management to influence expectations of bond markets and the public at large. The inherent difficulty in projecting macroeconomic variables – together with political bias – thwart the accuracy of budget forecasts. We improve accuracy by combining the forecasts of both private and public agencies for Italy over the period 1993-2012. A weighted combined forecast of the deficit/ ratio is superior to any single forecast. Deficits are hard to predict due to shifting economic conditions and political events. We test and compare predictive accuracy over time and although a weighted combined forecast is robust to breaks, there is no significant improvement over a simple RW model.

Combine to compete: improving fiscal forecast accuracy over time

Budget forecasts have become increasingly important as a tool of fiscal management to influence expectations of bond markets and the public at large. The inherent difficulty in projecting macroeconomic variables – together with political bias – thwart the accuracy of budget forecasts. We improve accuracy by combining the forecasts of both private and public agencies for Italy over the period 1993-2012. A weighted combined forecast of the deficit/ ratio is superior to any single forecast. Deficits are hard to predict due to shifting economic conditions and political events. We test and compare predictive accuracy over time and although a weighted combined forecast is robust to breaks, there is no significant improvement over a simple RW model.

Implementação de um método robusto para o controle fiscal de umidade em queijo minas artesanal. Abordagem metrológica multivariada

This study developed and validated a method for moisture determination in artisanal Minas cheese, using near-infrared spectroscopy and partial-least-squares. The model robustness was assured by broad sample diversity, real conditions of routine analysis, variable selection, outlier detection and analytical validation. The model was built from 28.5-55.5% w/w, with a root-mean-square-error-of-prediction of 1.6%. After its adoption, the method stability was confirmed over a period of two years through the development of a control chart. Besides this specific method, the present study sought to provide an example multivariate metrological methodology with potential for application in several areas, including new aspects, such as more stringent evaluation of the linearity of multivariate methods.

ARTO-iltapäivä kirjastolaisille: Voyager-tallentamisesta Artiva-tallentamiseen? ja Miten ARTOn metadata on muuttunut ja miksi?

Esitys Kansalliskirjaston järjestämässä ARTIVA-hankkeen (2013-2014) päätösseminaarissa 4.2.2015 Helsingissä.

Inter-jurisdictional fiscal competition: a review of the literature and policy recommendations

This paper surveys the literature on fiscal competition. We consider tax and expenditure competition in a more general set up where different jurisdictions within a federation may compete in the provision of public goods in order to attract some residents (Tiebout, 1956) and expel others (Brueckner, 1999); and/or for business. We address the vast literature on welfare gains or losses of these types of competition. Then, we discuss the empirical evidence, focusing on estimates of the sensitiveness of production factors to tax differentials and on the importance of the strategic interdependence among jurisdictions. We combine econometric studies with some case studies. Last we discuss the design of mechanisms to cope with fiscal competition, especially under a more global environment where factors become more mobile.

Independência do banco central e equilíbrio fiscal: algumas observações para o caso brasileiro

The objective of this paper is to analyze the main theoretical arguments for the analysis of the conduction of monetary policy on the fiscal side. Besides this, an analysis is made of the possible effects on the fiscal balance from the conduction of the monetary policy in the search for price stability after the Real Plan and due to an increase in the central bank independence (CBI) in the Brazilian case. The findings denote that the strategy for the conduction of the adopted monetary policy and the increase in the degree of CBI did not contribute to an imrovement in the fiscal balance.

O efeito da liberalização da conta de capital sobre a política fiscal: uma avaliação do caso brasileiro recente

In recent years there has been some agreement that capital account liberalization have provided restriction on economic policies. This paper provides some evidence for Brazil. I find evidence that capital account liberalization provided limits to fiscal policy in Brazil and its effects can depend on exchange rate policy.

O comportamento da renúncia fiscal oriunda dos gastos privados com atenção à saúde entre os anos 1996 e 2003

This article presents an economic approach trying to get the interrelations between the private expenditures on health care and the tax expenditures. It shows an overview of the family's expenses on health care confronted to the total of the same item declared to Secretaria da Receita Federal (Income Tax) that was converted into tax expenditures.

Fiscal reform and federal relations: Brazilian deadlocks

Brazilian fiscal reform got to deadlocks because proposals tried to avoid considering federal relations. There are two main types of federal relations: the competitive and the cooperative. In both types is possible to observe coordination mechanisms. Brazilian federalism is a mixture of both types what leads to difficulties finding solutions. We argue that is more important to find mechanisms to facilitate cooperation than to discuss the qualities of any alternative fiscal structure. Fiscal reforms brings along a great deal of uncertainty. So it is important to discuss the reform timing and the compensation mechanisms before hand.